US copper futures edged lower in early trade on Tuesday, holding just below key resistance levels, as further inventory draws in London bolstered the view that demand was growing, traders said.
"We're seeing stocks being drawn down, we're seeing more imports into China and the price has moved up. Right now, we have a little bit of resistance right around today's highs, but it is starting look a little more like a bull market ... responding well to any sell-offs. They all seem to be little consolidations," said one New York-based futures commission merchant.
Copper for May delivery was down 0.40 cent at $2.8450 a lb by 10:23 am EDT (1423 GMT) on the New York Mercantile Exchange's COMEX division, moving between $2.8350 and $2.8720. Resistance in May copper was pegged at the February 26 peak at $2.90, followed by $3.00, and then $3.10. Support was seen at around $2.70.
Spot March eased 0.30 cent to trade at its morning trough at $2.8410. Copper futures volumes were estimated at 1,000 lots by 10 am. The almost daily drawdowns in London Metal Exchange copper warehouse stocks coupled with stronger Chinese import data during the first two months of the year have fuelled speculation that the fundamentals have turned more bullish, traders said.
"We're seeing the fundamentals turn ... we're seeing stocks come down in London and better Chinese demand. Certainly, when you see their import numbers increase in December, January, and now February, that's pretty indicative that the de-stocking seen last year is pretty much finished and they are now in the process of building back inventories," said one copper dealer.
China, the world's largest consumer of the red metal, imported 239,772 tonnes of copper, including semi-finished products, in February, which was higher than January imports as domestic spot demand revived, customs data showed on Monday. Imports in the first two months of the year rose 56.2 percent from the year before, customs said.
Meanwhile, world supply and demand of copper will continue to rise in 2007, the Lisbon-based International Copper Study Group (ICSG) forecast on Tuesday. Demand for refined copper in 2006 hit 17.16 million tonnes, an increase of 3.3 percent over 2005, and was expected to rise by 4.2 percent to 17.884 million tonnes in 2007, the ICSG said. Looking at supply, LME copper warehouse stocks fell by 1,300 tonnes to 199,725 tonnes on Tuesday, while COMEX stocks were down by 232 short tons at 36,762 short tons on Monday.
Comments
Comments are closed.